STRATEGIES OF THE DEVELOPMENT OF RURAL INDUSTRIES

Proposals for the development of rural and agro based rural industries under the various
schemes implemented through the Khadi and Village Industries Commission (KVIC) are not
received in the Ministry of Micro, Small and Medium Enterprises.  However, the proposals
for setting up of units under the Prime Minister’s Employment Generation Programme (PMEGP)
implemented since 2008-09 for generating employment through setting up of ‘micro enterprises’,
including rural and agro based rural industrial units in both rural and urban areas through the
country, are received by the Agencies implementing PMEGP such as field offices of KVIC,
State/Union Territory Khadi and Village Industries Boards and District
Industries Centres.  These applications are screened by a Task Force headed by the District
Magistrate/Collector concerned and recommended to banks.  Requests are occasionally
received from the State Governments for enhancing/reducing the annual targets under this
scheme.  The proposals for enhancing the Targets are then considered keeping in view the past
performance, the extent of rural population, backwardness and urban unemployment and
potential.

Though PMEGP is being implemented in both rural and urban areas throughout the country for
setting up of ‘micro enterprises’, it is expected to contribute to rural industrialization in a big
way.  The scheme has an attractive subsidy pattern and lower beneficiary contribution for
projects proposed in rural areas.  Besides, the Mahatma Gandhi Institute for Rural
Industrialization atWardha, Maharashtra has been mandated to accelerate rural industrialization
process in the country through appropriate pilot projects and demonstration of innovative
technology to increase efficiency and productivity of rural industrial units.

KVIC has taken the following steps to improve the level of technology in the khadi and village
industries sector; such as in-house testing facilities through establishment of laboratories in
various khadi institutions.   Khadi institutions are also being motivated to achieve Total Quality
Management (TQM) by getting ISO 9001-2000 certification.  12 khadi institutions have so far
secured ISO certificates and another 13 institutions are in the process for getting the
certification.

Given the Indian reality, a number of factors should be taken note of in formulating a policy mix
for the agro-industries.
(1) Promotion of agro-industries has to be seen in the perspective of inelastic
nature of land available for cultivation. Future developments in agriculture
will require more cropping intensity and better water management,
adoption of new and improved varieties of seeds and crops, and use of
appropriate quantities of manures and pesticides.
(2) Indian agriculture continues to have low productivity. During the past few
years some progress has been made on this front, yet the productivity gaps
are only too wide (Table 5). For instance, the average yield of wheat in
India during 1979-1981 was 1,545 kg/ha, which increased to 2,117 kg by
1990. During the same period per hectare productivity of wheat in China
increased from 2,047 kg to 3,179 kg while the UK, FRG and France
managed to increase the yields to well beyond 6,000 kg. The gap in wheat
yield in India and these countries increased substantially during the 'eighties.
Similar is the case with paddy and a number of other crops. Should we not
then address ourselves to the basic question of how land productivity can
be raised? This may necessitate larger and newer varieties of industrial
inputs and the creation of research infrastructure and farm information
channels. Efforts at increasing agricultural productivity may also require
regional specialization, as each of the crops cannot be grown profitably in
all the locations of the country.
(3) Coupled with low productivity, Indian agriculture suffers from substantial
wastage. Estimates of waste differ for individual crops. There seems to be,
however, a consensus that nearly 10-15 per cent of the grains and 20-25
per cent of the fruit and vegetables in India perish each year.56 This is
substantial in terms of quantum as also as a percentage of the national
agricultural output. In a country like India with 30-40 per cent of the
population living below the poverty line, it seems a criminal waste.
Systematic efforts should, therefore, be made to minimize wastage and
perishing of farm output and to adopt practices and technologies that cut
down processing losses. Efforts to improve quality and capacity of
warehousing for grains and expansion of cold storage facilities for fresh
vegetables and fruits is at best a part answer.
At this stage of India's development, it is necessary to undertake a thorough
scrutiny of the post-harvest processes and technologies and identify appropriate
programmes. For instance, the traditional technology in rice-husking is labour-intensive but
it results in breaking of the rice grain. Also since manual husking is a cottage and small
scale operation, the husk is left as a waste, because

Advancement of agro-industries, fully integrated with the developmental

needs of rural population, calls for bold and possibly unconventional
measures. At the administrative level, it requires urgently the creation of a
district level authority vested with wide-ranging powers and having
majority representation of cooperative bodies. This authority would be the
nodal agency for providing various support services such as information on
crop varieties, weather, products, markets and coordination of technology
acquisition.

Coupled with low productivity, Indian agriculture suffers from substantial

wastage. Estimates of waste differ for individual crops. There seems to be,
however, a consensus that nearly 10-15 per cent of the grains and 20-25
per cent of the fruit and vegetables in India perish each year.56 This is
substantial in terms of quantum as also as a percentage of the national
agricultural output. In a country like India with 30-40 per cent of the
population living below the poverty line, it seems a criminal waste.
Systematic efforts should, therefore, be made to minimize wastage and
perishing of farm output and to adopt practices and technologies that cut
down processing losses. Efforts to improve quality and capacity of
warehousing for grains and expansion of cold storage facilities for fresh
vegetables and fruits is at best a part answer.